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Wall Street Expects the Federal Reserve to Raise Interest Rates in 2026

About 70% of major financial institutions predict the Federal Reserve will increase interest rates by at least half a percentage point next year.

By Piggy PressSep 16, 20262 min read 2 new words

Photo via The Motley Fool

In simple terms

The Fed's interest rate decisions directly affect what you pay on credit cards and mortgages, and what you earn in savings accounts. Higher rates can slow the economy but may also help control prices.

The Federal Reserve, which controls America's most important interest rate, is about to announce whether it will make changes today. This decision matters because it affects everything from mortgage rates to savings account interest. When the Fed raises or lowers its main interest rate, banks and consumers feel the impact almost immediately.

Wall Street professionals have been split about what the Fed would do, but recent inflation data has shifted expectations significantly. Seventy percent of major financial institutions now believe the Fed will raise rates by at least 0.5 percentage points (called a "basis point") in 2026. This expectation could cause stock prices to move sharply up or down when the announcement happens.

Fun fact

Over recent weeks, expectations have been nearly evenly split about whether rates would go up or down, but the August inflation report changed Wall Street's mind decisively.

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Source: The Motley Fool